US regulators eye curbs to slow stock price drops

By Jonathan Spicer and Rachelle Younglai

NEW YORK/WASHINGTON, May 8 (BestGrowthStock) – U.S. securities
regulators are considering new curbs to slow stock trades when
markets are plunging following Thursday’s dramatic sell-off, a
person familiar with the matter said on Saturday.

Securities and Exchange Commission officials are
considering whether trading restrictions should be imposed
across markets for companies that have fallen a certain
percentage within a specific time-frame, the person said.

The SEC could not immediately be reached for comment.

The SEC and the Commodity Futures Trading Commission are
still trying to determine the causes for the massive stock
market meltdown fueled by computerized trades that caused a
nearly 1,000-point plunge in the Dow Jones industrial average.

Although the regulators have been working around the clock
at initial data since Thursday to find the causes, they have
yet to notify exchanges of an “official inquiry” into the
sell-off, another source familiar with the review told Reuters.
That step would trigger the release of more information to
regulators.

When that data comes, the investigation will likely focus
on who quoted the “bids” and “offers” throughout the market
dive, the bid-ask spreads, trading volumes, and a full list of
the canceled trades, said the source, who requested anonymity
because the investigation is ongoing.

The source added regulators conducting the probe “are being
diligent” but said they were calm about it despite ongoing
jitters on Wall Street.

The source said regulators had moved away from a theory
that the stock plunge was called by a trading mistake, or a
so-called “fat finger” episode in keyboard data entry.

Regulators are looking at links between futures and cash
markets for stocks.

At one point on Thursday, at least a half-dozen stocks,
including Accenture (ACN.N: ) and Exelon Corp (EXC.N: ) briefly
traded for as low as a penny a share.

Critics of the New York Stock Exchange said the routing of
trades to all-electronic venues accelerated selling and exposed
the need for market-wide, stock-specific circuit breakers to
stop such meltdowns.

Trading speeds and volumes have ramped up in the last few
years as regulators encouraged the proliferation of new trading
venues to challenge the incumbent exchanges’ near monopoly. But
in the past year, the SEC had raised some red flags about the
fragmented marketplace and so-called high-frequency trading,
although it has made few changes.

Investing Research

(Reporting by Jonathan Spicer, Rachelle Younglai, David
Lawder; writing by David Lawder; editing by Mohammad Zargham)

US regulators eye curbs to slow stock price drops